Double whammy: Cuban peso in free fall against U.S. dollar while inflation in Cuba hits 300% to 500%

Unfavorable exchange rate: 100 to 1

From our Bureau of Great Moments in Socialism

And you thought 7% inflation here in the U.S. was hard to cope with? Try living in Castrogonia.

Cubans are paid in pesos, but scarce food and other necessities are only available in dollar stores. But… the number of pesos needed to buy one dollar is now at 100 to 1, and that exchange rate is just going to get worse and worse.

And… the price of everything keeps going up and up and up, just as it did in its colony of Venenozuela and as happened in Weimar Germany nearly a century ago.

The average minimum monthly wage– which is what the vast majority of working Cubans earn– is 2,100 Cuban pesos, which equals $210. The minimum monthly pension — which covers most retired Cubans — is 1,580 pesos, or $158. And you can forget about these wages being adjusted for inflation.

Then there’s also the plague…. and repression…. At least it’s not too hot yet. But wait till Cuba’s “winter” climate is replaced with stifling heat. Lord have mercy.

Great-grandchildren of the so-called Revolution

From Granma Euro-Lite (Reuters)

The Cuban peso was trading at nearly 100 to the dollar on the informal market Tuesday, according to a trader and online trackers, a depreciation of more than 30% in less than a month and four times the fixed official rate.

The peso’s free fall is bad news for a population that for two years has confronted a grave economic crisis here and unusually severe shortages of food, medicine and other goods, a predicament made worse by the coronavirus pandemic and the Cold War-era U.S. embargo.

Local economists and business leaders attributed the recent depreciation to a growing perception that Cuba’s economy here continues to weaken, with runaway inflation, while the government appears unable to reverse the trend.

Independent online news outlet El Toque tracker, the most watched in the communist-run country, had the greenback trading for 97.50 pesos on Tuesday, compared to 72 when the year began.

The local electronic currency, called the MLC, which Cubans use on par with U.S. dollars to purchase goods in domestic specialty markets, was rising in tandem with the U.S. currency. It was trading on the informal market at 95.90 on Tuesday, the online trackers showed.

The peso and MLC have no value outside of Cuba. The government fixes the exchange rate, currently 25 to a dollar, but has stopped trading dollars and other exchangeable currencies because it says it has no cash.

“We have to deepen the political discussion with those who are increasing prices in the state and non-state sector,” President Miguel Diaz-Canel told a Communist Party meeting last week, blaming speculation and greed for rising prices.

Cuba’s government late last year put annual inflation at 70%, but at least three economists consulted by Reuters say the rate is between 300% and 500%. Soaring prices have squeezed consumers already hard hit by economic crisis and the pandemic.

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1 thought on “Double whammy: Cuban peso in free fall against U.S. dollar while inflation in Cuba hits 300% to 500%”

  1. The Cuban peso was once on a par with the dollar (you know, when Cuba was “exploited” by the US). However, no matter how bad it gets on the island, “free” health care and “education” continue to be all the usual suspects need to keep up their “revolutionary” stance (as they never tire of repeating).

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